AMD Settles Patent Suit 'For Our Customers'

"This agreement passes on the protection of the settlement to customers," AMD spokesperson Drew Prairie told the E-Commerce Times. "They can use AMD without worrying." Intergraph had pending lawsuits that involved infringement claims against computers equipped with AMD chips, but those suits will now be dropped, he noted.

AMD has announced the settlement of patent claims with Intergraph in an agreement
that calls for AMD to pay Intergraph US$10 million, plus 2 percent of profits from
its microprocessor sales for three years. The maximum payment from AMD is to be
capped at $25 million.

In return, Intergraph will grant AMD a license for its "Clipper"
microprocessor patents. The company also will drop all claims of
infringement against AMD customers who use AMD processors.

AMD spokesperson Drew Prairie told the E-Commerce Times that the company
believes financial terms of the agreement are fair. "We wanted protection
for our customers," he said. "That makes it worth it."

Comfortable in Court

Intergraph first developed the Clipper processor for workstations and later switched to Intel chips.

However, the patents the company obtained while developing Clipper
became the basis for suits filed against AMD, Dell, Gateway, Intel and
Hewlett-Packard. Those patents relate to computer-system memory management
technology.

In January, AMD filed a declamatory patent action against Intergraph,
asserting that the Clipper processor patents were not valid and that
AMD was not infringing on any microprocessor technology.

Commenting on the latest settlement in a press release, Intergraph president and
CEO Halsey Wise said: "We are pleased to have resolved our patent issues with
AMD. We believe this agreement is in the best interests of our shareholders
based on all of the circumstances, including the scope of AMD's alleged
infringement and damage base."

Customer Care

The main reason why AMD settled the suit, according to Prairie, was a concern
that Intergraph suits against AMD customers would be detrimental to both
customers and the company.

"This agreement passes on the protection of the settlement to customers," he
said. "They can use AMD without worrying." Intergraph also had pending lawsuits
that involved infringement claims against computers equipped with AMD chips,
but those suits will now be dropped, he noted.

Intergraph's suits against other technology companies have produced a passel
of results, all in Intergraph's favor.

For example, Intel settled a patent infringement claim by paying $300 million
to Intergraph. Then, last month, Intel agreed to pay Intergraph $225 million to
settle claims left over from that judgment. That interchange could keep Dell out
of the litigation hotseat, since Dell has an indemnification agreement with
Intel.

Gateway and HP may not be as fortunate as Dell. Their cases are still
pending, with both expected to be heard in August. However, it is possible
that the agreement with AMD will keep them out of trouble. Prairie noted that
both companies sell AMD chips in their computers, a fact that could affect
judgments and settlements.

Growing Trend

The AMD-Intergraph case, like the recently settled
Microsoft-InterTrust lawsuit,
illustrates a larger trend in the technology industry. Embarking on patent-infringement suits is an increasingly accepted strategy for protecting intellectual property, and the rate of suits like those launched by Intergraph will not slow anytime soon, according to experts.

Steve Frank, a partner in the patent and intellectual property group of
Boston-based law firm Testa Hurwitz & Thibeault, told the E-Commerce Times
that technology companies have become more protective of intellectual property
than they once were. Also, whereas copyright was sometimes used for software
and other products in the past, patents are now being utilized much more.

One encouraging factor for companies that want to use patents to protect
themselves is the fact that judges are increasingly tolerant, and even
approving, of the tactic.

"This is a very long-term trend," he said. "It used to be that the courts
viewed patents with suspicion, because [they] created a monopoly. But now they
see them as a way to protect innovation."